An Annuity Consists of Payments of $600 at the Beginning

question 105

Multiple Choice

An annuity consists of payments of $600 at the beginning of each month with an annual rate of 5.7 per cent. Is this an ordinary annuity or an annuity due? ​

• A) ordinary annuity
• B) annuity due

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Definitions:

Terminal Value

The value of a business or project beyond the forecast period when future cash flows can be estimated.

Non-Normal Cash Flows

Cash flow patterns that do not fit the standard or expected periodic inflow or outflow of funds, often seen in irregular income streams.

MIRR

The Modified Internal Rate of Return (MIRR) is a financial measure that adjusts the internal rate of return (IRR) formula to account for different cash flow reinvestment rates.

NPV

Net Present Value, a calculation used to assess the profitability of an investment by summing the present values of its cash inflows and outflows.